Elevance Health Inc at Barclays Global Healthcare Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Mok - Barclays - Analyst : <_ALACRA_META_ABSTRACT>Let's start with Medicare enrollment. The latest CMS data shows your total Medicare membership is tracking 35,000 or about 1.5% above the high end of your Medicare Advantage guidance, which you reiterated through 8-K late afternoon yesterday. Can you help us square the February data with your reiterated guidance, Mark?

Question: Andrew Mok - Barclays - Analyst : Got it. Okay. So we're 35,000 above right now, you're saying there's a contract change coming, so that should reduce you about 30,000 or so and there's no expected growth for the balance of the year. So should we be thinking about the upper end or the high end of the range at this point?

Question: Andrew Mok - Barclays - Analyst : Understood. So given some of the growth in the retail membership this year, how does year one new member profitability compare to continuing membership? And what are you expecting for this year's new member cohort specifically?

Question: Andrew Mok - Barclays - Analyst : Got it. And then from a margin perspective, I think you're expecting fairly stable margins year-over-year. There seems to be a few moving pieces with the pricing benefit design, membership growth, core utilization, and even the STAR's headwind. Can you share with us where Medicare margins landed at the end of 2024? And maybe walk us through the puts and takes to bridge to stable Medicare margins for 2025?

Question: Andrew Mok - Barclays - Analyst : Got it. Understood. And then maybe your comments around 2025 EPS cadence and seasonality imply a steeper ramp to 4Q MLR, which you attributed to both business mix and changes from the IRA, I think PDP and MAPD members in total maybe account for 10% to 15% of total risk membership. Can you help us better understand the expected Part D MLR cadence baked into guidance and how the proportionally small membership base is driving such a strong change in MLR seasonality?

Question: Andrew Mok - Barclays - Analyst : We've also seen a severe flu season this year. Do you have any sense of whether that would meaningfully impact 1Q MLR at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:00PM, ELV.N - Elevance Health Inc at Barclays Global Healthcare Conference

Question: Andrew Mok - Barclays - Analyst : Got it. So taking all in, reiterating guidance, Q1 EPS consensus is about $1 light, and that reflects the impact of flu as well.

Question: Andrew Mok - Barclays - Analyst : Understood. So shifting to Medicaid, can you share how composite Medicaid rates developed for 1/1 renewals and comment maybe how they're tracking for the upcoming renewal cycle around 4/1 and 7/1?

Question: Andrew Mok - Barclays - Analyst : Great. And it feels like most of the margin recovery in Medicaid does come from better state rates, which is somewhat passive. Can you help us understand maybe some of the actionable items you can take to items that are in your control to drive better cost outcomes and management? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:00PM, ELV.N - Elevance Health Inc at Barclays Global Healthcare Conference

Question: Andrew Mok - Barclays - Analyst : Great. Let's move on to commercial. Several of your peers in the stop-loss business called out pressure throughout the back half of the year and even more so in the fourth quarter. But stop-loss didn't seem to be a source of fourth quarter pressure for Elevance. Can you take a step back and give us some more color around what you saw with respect to the commercial and stop loss trends and your experience there and why you might have had some differentiated trends?

Question: Andrew Mok - Barclays - Analyst : Understood. And then pricing aside, specialty pharmacy has been an area of accelerating trend across the broader health care industry. What are you seeing with respect to this trend? And which book of business is most impacted by this?

Question: Andrew Mok - Barclays - Analyst : Right. And just given the number of specialty drugs that have increased and the label expansions that we've seen, is it more difficult to kind of predict the utilization today than maybe it was five years ago?

Question: Andrew Mok - Barclays - Analyst : Great. And then taking a step back, you've done a nice job improving commercial margins over the last few years. What's the trajectory of commercial margins from here? And where do you see the opportunities to expand margins further?

Question: Andrew Mok - Barclays - Analyst : Great. And there's been a lot of headlines around DOJ's efforts to reduce the federal workforce. You have a large federal employee benefits program that represents about 1.6 million members or $15 billion in revenue. How are you thinking about the potential changes to that business? And is there anything explicitly considered for 2025? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:00PM, ELV.N - Elevance Health Inc at Barclays Global Healthcare Conference

Question: Andrew Mok - Barclays - Analyst : Understood. You're also seeing solid growth in the individual ACA market this year despite some new program integrity measures. Can you share what your experience has been so far with respect to February effectuated enrollment, how that came in and how you expect intra-year attrition to play out?

Question: Andrew Mok - Barclays - Analyst : When you say a little bit lighter, is that a reflection of just kind of the member premiums paid? Or do you think that's more driven by some of the newer measures around failure reconcile, things of that nature that are driving effectuated enrollment lower?

Question: Andrew Mok - Barclays - Analyst : Got it. Do you have full visibility into the failure to reconcile at this point?

Question: Andrew Mok - Barclays - Analyst : Understood. Sticking with the ACA, I would love to hear how you're thinking about the potential membership attrition and the impact to the risk pool if Congress allows enhanced subsidies to expire at the end of the year?

Question: Andrew Mok - Barclays - Analyst : Are you preparing two sets of pricing at this point, one with the subsidies, one without the subsidies?

Question: Andrew Mok - Barclays - Analyst : Got it. Maybe let's move on to Carelon. You recently closed on the acquisition of CareBridge late last year, which represents a significant expansion into the home. Can you walk us through the strategic rationale for this deal and any expected contributions to earnings over the next few years?

Question: Andrew Mok - Barclays - Analyst : Would you like to get even bigger in the home? And is there a strategic preference for Medicaid first or Medicare first home providers?

Question: Andrew Mok - Barclays - Analyst : Great. Well, we're just about up on time here. So thank you so much, Mark, for the fireside today, and enjoy the rest of the conference